SkyCity near year high on convention centre news

SkyCity Entertainment Group was trading near an annual high yesterday, even before its lucrative convention centre deal clearance and now executives are set to begin discussions with the Government.

Shares were $4.02 just as the deputy Auditor-General released the report. That was only eclipsed by last March's $4.05 and the investment community has already expressed a strong appetite for the controversial $350 million centre. The shares closed at $4.02 yesterday.

Jason Familton, First NZ Capital's equity research director, said one of the most crucial aspects of the deal was SkyCity's casino licence extension.

"The next step is to finalise the regulation changes and additional gaming product with the Government. We anticipate around four to six weeks away. [It's a] positive announcement and now looks like the National Convention Centre is going to happen along with the concessions granted, including importantly an extension of the licence at the property," Familton said.

Mark Wilson and Daniel Pi, Deutsche Bank research analysts, cited the Auckland deal along with the company's Hamilton expansion as part of SkyCity's developments.

If SkyCity builds the centre, thousands of new jobs will be created in the construction sector, hit this month by Mainzeal Property & Construction's receivership. Long-term jobs will also be created in the tourism sector if SkyCity goes ahead.

The company yesterday issued an NZX notice in which chief executive Nigel Morrison welcomed the report and said he would to talk to the Government.

"We remain willing to invest up to $350 million to develop, own and operate the New Zealand International Convention Centre, provided acceptable returns can be delivered on the total project. There is no doubt New Zealand needs to invest more in tourism infrastructure, such as the NZICC," Morrison said.

"In addition to creating a major construction project for Auckland, it will allow New Zealand to compete globally for a fair share of large scale conferences exhibitions and events, which will increase international visitation, deliver much needed jobs and stimulate economic growth in Auckland and across New Zealand."

Morrison told shareholders at last year's annual meeting what he planned to do once the probe's findings were revealed.

"Following completion of this report, we hope to re-engage with Government and see if we can conclude these negotiations," he said on October 19.

"We have spent around $40 million as at the end of September acquiring a valuable land bank adjacent to our Auckland site between Hobson and Nelson streets," he said.